Budget 2026: Easing the Financial Burden on Indians Studying and Seeking Medical Care Abroad
The Union Budget 2026 delivered welcome news for Indian families sending funds overseas for education and medical treatment. A reduction in the Tax Collected at Source (TCS) under the Liberalised Remittance Scheme (LRS) from 5% to 2% offers significant upfront cost relief. This change, announced by Finance Minister Nirmala Sitharaman, directly addresses a long-standing pain point for many aspiring students and those requiring specialized healthcare not readily available in India.
The Ripple Effect of Lower TCS
For years, the 5% TCS acted as a financial hurdle, particularly during the crucial admission and visa application stages. Families often had to arrange additional funds simply to cover this tax, which was later potentially reclaimable as an income tax credit. The reduction to 2% eases this immediate cash flow pressure. Consider the case of the Sharma family in Delhi, whose son was accepted to a university in the US. Previously, a $20,000 tuition deposit would have incurred a $1,000 TCS, now reduced to $400 – a substantial saving.
This isn’t a new initiative in isolation. Last year’s budget removed TCS on education loans under Section 80E, and increased the tax-free remittance limit to ₹10 lakh. These combined measures demonstrate a clear government focus on facilitating international education and healthcare access for Indian citizens.
Beyond Cost Savings: New Pathways and Cost Optimization
The budget’s impact extends beyond simply lowering the tax burden. Saurabh Arora, CEO of University Living, highlights the synergy with emerging educational models. “Combined with policy support for NEP-aligned ‘Start in India, Transfer Abroad’ pathways, students can potentially reduce overall education costs by 20–40%,” he explains. These pathways allow students to complete initial coursework in India at a lower cost before transferring credits to a foreign university.
Pro Tip: Explore ‘Start in India, Transfer Abroad’ programs to potentially lower your overall education expenses. Research institutions offering such pathways and ensure credit transferability is clearly defined.
Navigating Currency Fluctuations and Compliance
While the TCS reduction is positive, experts caution against complacency. Currency volatility remains a significant factor. A sudden depreciation of the Indian Rupee can quickly offset the tax savings. Furthermore, ensuring education loans are routed through compliant institutions is crucial to fully benefit from the existing tax exemptions. According to Vinay Bagri, CEO of Niyo, the lower TCS rate is particularly helpful during the “heavily front-loaded” expense phase of studying abroad – tuition, accommodation, and initial living costs.
Impact on Medical Tourism and Global Mobility
The benefits aren’t limited to education. Zubin Karkaria, CEO of VFS Global, notes the positive impact on medical tourism. “Reductions in TCS…will ease financial pressure on Indian travellers and students, boosting global mobility and connectivity.” India is a significant source country for medical tourism, with patients seeking specialized treatments abroad. Lowering the financial barriers will likely encourage more individuals to pursue healthcare options internationally.
Did you know? India is one of the top countries for outbound medical tourism, with a growing number of patients seeking treatment in destinations like the US, UK, and Singapore.
Industry Perspectives: A Widening Net of Opportunity
Industry leaders are optimistic about the long-term effects. Piyush Kumar, Regional Director at IDP Education, believes the move will “improve access to global education opportunities and help Indians, who form one of the largest student cohorts in foreign institutions.” Ankit Mehra, CEO of GyanDhan, emphasizes the improved affordability and planning capabilities for families, potentially reducing reliance on short-term borrowing.
Looking Ahead: Trends Shaping International Education and Healthcare
Several trends are poised to further shape the landscape of international education and healthcare for Indians:
- Rise of Hybrid Learning: More universities are offering blended learning models, combining online and in-person instruction. This can reduce living expenses and offer greater flexibility.
- Increased Focus on STEM Fields: Demand for STEM (Science, Technology, Engineering, and Mathematics) skills remains high globally, driving enrollment in related programs.
- Growth of Specialized Medical Treatments: Advances in medical technology are creating demand for specialized treatments not available in all countries, fueling medical tourism.
- Digitalization of Financial Services: Fintech companies are streamlining the process of international remittances, offering competitive exchange rates and lower fees.
FAQ
Q: What is the TCS rate on remittances under the LRS now?
A: The TCS rate has been reduced from 5% to 2% for education and medical purposes.
Q: Does this change apply to education loans?
A: No, TCS was already removed on education loans taken under Section 80E last year.
Q: What is the tax-free limit for family remittances?
A: Individuals can send up to ₹10 lakh to family members abroad without TCS. Amounts exceeding this are subject to TCS.
Q: How can I minimize the impact of currency fluctuations?
A: Consider hedging your currency risk through financial instruments or transferring funds in tranches.
Q: Where can I find more information about ‘Start in India, Transfer Abroad’ programs?
A: Contact universities and educational institutions directly to inquire about available pathways and credit transfer policies. University Grants Commission (UGC) is a good starting point.
Reader Question: “I’m planning to send my daughter abroad next year. Should I start saving in a foreign currency account now?”
This is a great question! Consulting with a financial advisor is recommended, but generally, starting to save in a foreign currency account can help mitigate currency risk, especially if you anticipate the Rupee to depreciate. However, consider the potential interest rate differences and associated fees.
Ready to plan your future? Explore our articles on choosing the right university abroad and financing your education for more in-depth guidance. Don’t forget to subscribe to our newsletter for the latest updates on international education and financial planning!
